Bitcoin Nears Cycle Bottom as Over Half Supply Held at Loss

Bitcoin has historically bottomed within weeks of over 50% of its supply being held at a loss, according to K33's latest report. As of the time of writing, more than half of all circulating Bitcoin is currently underwater, indicating that the market may be nearing its cycle low.

K33 analyzed past cycles and found that previous bear markets typically bottomed within weeks after this threshold was reached. For example, in 2017, Bitcoin hit a bottom 31 days after over half of its supply was held at a loss; similarly, the November 2018 and November 2022 cycles saw bottoms around 23 and 13 days later respectively.

However, large sellers like spot Bitcoin ETF holders could influence this cycle differently due to their significant market impact. Recently, these ETFs experienced two consecutive inflows of $265 million on Monday but also witnessed a massive $4.51 billion outflow in June, marking the worst month on record according to Farside Investors data.

Other indicators such as Block Scholes Risk Appetite Index are pointing towards an imminent market bottom. This index measures bullish and bearish momentum in digital assets; it fell to -1.27 on July 3 but has since bounced higher, historically preceding a median spot return of 12% over the following 100 days.

The recovery suggested by these indicators could lead to further allocation towards risk assets such as crypto, according to Block Scholes spokespersons. This signals potential positive movement for Bitcoin and other digital currencies in the near future.

Traders should monitor both K33's metrics on supply held at a loss and broader market sentiment gauges like the Block Scholes Risk Appetite Index closely over the coming weeks. These could provide critical insights into whether the current downturn is nearing its end.

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Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.